Scottish privatisation ruled out

The privatisation of Scottish Water has been rejected by an Independent Budget Review, commissioned by the Scottish Parliament.

The review sets out cross-sector options that could be considered in the face of £3.7B shrink in the country's £30B budget.

The minority Scottish National Party Government welcomed the finding. Secretary for Finance & Sustainable Growth, John Swinney, said: "We particularly welcome the Review's recognition of the view, which we share, that services should not be subject to privatisation.

However the public sector union, Unison, has rejected the report's recommendation that Scottish Water should be financed in a similar way to Dwr Cymru Welsh Water. The review recommended ownership be transferred to a 'public interest company' like Glas Cymru.

Gerry Crawley, regional organiser for Unison, said: "We certainly do not want to follow the Welsh Water model as a mutual or 'public interest company'.

In the capital intensive water industry, bodies like these are effectively controlled by the private financial institutions.

"They would insist that their risk is minimised by transferring services and jobs to English and European private water companies. That is what is happening at Welsh Water."

Accountants KPMG said the mutualisation of Scottish Water may be one of the "easier" options for politicians facing touch spending decisions.

Jenny Stewart, head of public sector at KPMG Scotland insisted that "the company itself could continue to operate as it does already - so there would be no adverse impact on jobs and services."

The annual report of the Water Industry Commission for Scotland (WICS), released at the end of June, highlighted the transformation of the water industry over the past ten years.

It said that average household bills are around £105 a year lower than they would have been, leakage has been cut by around 36%, and more than £5.5 billion has been invested in maintaining current assets, and improving water quality and environmental performance.

Alan Sutherland, chief executive of WICS, commented: "In Scotland there has been a remarkable transformation of the water industry over the past ten years. We now have a company - operating successfully in the public sector - of which Scotland can be proud."

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